Treasury Cabinet Secretary Henry Rotich has said the government will clear debts owed to sugarcane farmers.
He noted that more than Sh1.9 billion had been made available by the government to carry out the exercise.
Addressing the 11th Ordinary Session of the Intergovernmental Budget and Economic Council (IBEC) meeting chaired by Deputy President William Ruto in Karen on Tuesday, Mr Rotich said the verification of the farmers to be paid had been completed.
“The pending issue would now be to come up with a long-term payment solution to farmers by sugar millers,” said the Cabinet Secretary in a meeting that was attended by about 20 Governors.
Mr Rotich said farmers would be paid directly so as to avoid the historical challenges that they have been facing.
The Deputy President urged farmers to supply sugarcane to factories that can pay.
“Until there is some clarity on what would happen to these ailing sugarcane millers, farmers should deliver their produce to those entities that can honour their obligations,” said Dr Ruto.
The move by the government to pay farmers, Dr Ruto said, would offer some sufficient breather to struggling millers to tidy their balance sheets.
Governors present in the deliberations were Anyang’ Nyong’o (Kisumu), Ferdinand Waititu (Kiambu), Lee Kinyanjui (Nakuru), Kiraitu Murungi (Meru), Mutahi Kahiga (Nyeri), Mwangi Wa Iria (Murang’a), Wycliffe Wangamati (Bungoma), Sospeter Ojaamong (Busia) and Francis Kimemia (Nyandarua).
Others were Wycliffe Oparanya (Kakamega), Joyce Laboso (Bomet), Samuel Ole Tunai (Narok), Joseph Ole Lenku (Kajiado), Stanley Kiptis (Baringo), Dhadho Godhana (Tana River), Stephen Sang (Nandi), Moses Lenolkulal (Samburu) and Wilber Otichilo (Vihiga).
Prof Nyong’o wondered why some millers were still crushing sugarcane yet unable to pay their debts.
“It is time such factories were compelled to give a preference to farmers before honouring other statutory payments,” said the Kisumu Governor.
Meanwhile, counties are being urged to set realistic own-source revenue targets and align their procurement plans to cashflow projections to free themselves from the pending bills burden.
Controller of Budget Agnes Odhiambo said counties also need to ensure all pending bills are properly budgeted in the ensuing financial year.
“Pending bills should be a first charge to the budget,” she said during the IBEC meeting.
Ms Adhiambo regretted that pending bills were resulting to high cost of good and services and eroding investor confidence.
As at June 2018, counties had a pending bill of Sh92.7 billion as compared to June 2015’s Sh37.7 billion.
The Controller of Budget noted that all was not gloomy as 15 counties had already fully budgeted for pending bills in the 2018/2019 financial year, with 23 having partly budgeted for the bills.
Moreover, a total of 34 counties had finalised the verification of their pending bills and factored in payments in the financial year.
Dr Ruto called on the Controller of Budget and the Auditor General to support the remaining 13 counties to finalise and honour their liabilities.
He urged counties to audit their pending bills and “any payments with no issues should be given a priority”.
“If it is payable and you (counties) are not honouring, that is in contravention of the Public Finance Management Act and it is punishable,” said Treasury CS Henry Rotich.
Mr Oparanya urged the Treasury to be releasing funds to counties in time so as to help check the rise in pending bills.